Dealing with Competition 11 Dealing with Competition Marketing Management, 13th ed

Chapter Questions How do marketers identify primary competitors? How should we analyze competitors’ strategies, objectives, strengths, and weaknesses? How can market leaders expand the total market and defend market share? Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 11-2

Chapter Questions (cont.) How should market challengers attack market leaders? How can market followers or nichers compete effectively? Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 11-3

Progressive Competes on Marketing Programs Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 11-4

Figure 1.1 Five Forces Determining Segment Structural Attractiveness Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 11-5

Identifying Competitors Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 11-6

Industry Concept of Competition Number of sellers and degree of differentiation Entry, mobility, and exit barriers Cost structure Degree of vertical integration Degree of globalization Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 11-7

Figure 11.2 Strategic Groups Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 11-8

Figure 11.4 A Competitor’s Expansion Plans Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 11-9

Table 11.1 Customer Ratings of Competitors on Key Success Factors Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 11-10

Strengths and Weaknesses Share of market Share of mind Share of heart Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 11-11

Steps in Benchmarking Determine which functions or processes to benchmark Identify the key performance variables to measure Identify the best-in-class companies Measure the performance of best-in-class companies Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 11-12

Steps in Benchmarking (cont.) Measure the company’s performance Specify programs and actions to close the gap Implement and monitor results Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 11-13

Table 11.2 Market Share, Mind Share, and Heart Share Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 11-14

Figure 11.5 Hypothetical Market Structure 10% Market Nichers 20% Market Follower 30% Market Challenger 40% Market Leader Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 11-15

Gap Tried to Appeal to Too Broad a Market Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 11-16

Expanding the Total Market New customers More usage Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 11-17

Figure 11.6 Six Types of Defense Strategies Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 11-18

Figure 11.7 Optimal Market Share Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 11-19

Factors Relevant to Pursuing Increased Market Share Possibility of provoking antitrust action Economic cost Pursuing the wrong marketing-mix strategy The effect of increased market share on actual and perceived quality Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 11-20

Other Competitive Strategies Market Challengers Market Nichers Market Followers Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 11-21

Market Challenger Strategies Define the strategic objective and opponents Choose a general attack strategy Choose a specific attack strategy Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 11-22

General Attack Strategies Frontal Attack Flank Attack Encirclement Attack Bypass Attack Guerrilla Warfare Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 11-23

Pepsi buys Gatorade in a Bypass Strategy Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 11-24

Specific Attack Strategies Price discounts Lower-priced goods Value-priced goods Prestige goods Product proliferation Product innovation Improved services Distribution innovation Manufacturing-cost reduction Intensive advertising promotion Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 11-25

Market Follower Strategies Counterfeiter Cloner Imitator Adapter Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 11-26

Market Nicher Strategies Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 11-27

Niche Specialist Roles End-User Specialist Vertical-Level Specialist Customer-Size Specialist Specific-Customer Specialist Geographic Specialist Product-Line Specialist Job-Shop Specialist Quality-Price Specialist Service-Specialist Channel Specialist Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 11-28

Balancing Orientations Competitor- Centered Customer- Centered Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 11-29

Marketing Debate How do you attack a category leader? Take a position: The best way to challenge a leader is to attack its strengths. or 2. The best way to attack a leader is to avoid a head-on assault and to adopt a flanking strategy. Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 11-30

Marketing Discussion Pick an industry. Classify firms according to the four different roles they might play. How would you characterize the nature of competition? Do the firms follow the principles described in this chapter? Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 11-31